WEST LAFAYETTE, Ind. and
CHICAGO, June 5, 2018 /PRNewswire/ -- Agricultural
producer sentiment rose last month to its highest level since
January 2017, as producers expressed
an improved view of current conditions and future expectations of
the U.S. agricultural economy, according to the Purdue University/CME Group Ag Economy
Barometer.
The May barometer reading of 141 was 16 points higher than
April. The rise in the barometer, a sentiment index derived from a
monthly survey of 400 agricultural producers across the U.S., was
driven both by producers' improved view of current conditions in
the production agriculture sector and, especially, their more
optimistic view of the future.
The Index of Current Conditions increased to 132 during May, 9
points higher than in April, while the Index of Future Expectations
climbed to 145, 19 points higher than a month earlier, making it
the highest future expectations reading since February 2017.
Driving that optimism was a large improvement in producers'
expectations regarding the future for both the U.S. ag economy and
their own farms' financial condition.
"Over the last month there's been a relaxation in international
trade tensions with China and that
seems to be playing a role in how producers are viewing their
financial future," said James
Mintert, the barometer's principal investigator and director
of Purdue University's Center for
Commercial Agriculture. The rise in the Index of Future
Expectations was the largest one-month increase since January 2017. This was in contrast to last
month's reading when, in the midst of deteriorating trade
relations, there was a decline in sentiment towards the
agricultural economy as a whole and with respect to producers' own
farming operations.
Despite the improvement in sentiment, producers' perspectives on
making large investments on their farms changed very little with
only 27 percent of producers saying now is a good time to make
large farm investments.
Producers also weighed in on the farm bill debates taking place
in Congress. When asked whether the current 2014 version of the
U.S. farm bill provided producers with a financial safety net, only
25 percent of respondents said it was effective. More specifically,
when asked about the current ARC-County (Agricultural Risk
Coverage) and PLC (Price Loss Coverage) income support programs
included in the 2014 farm bill, only one-quarter of the respondents
said these programs were effective in providing a financial safety
net and nearly one-third said they were not effective.
When asked about crop insurance, an integral part of current
farm bill discussions, nearly two-thirds of producers considered
the crop insurance program to be effective in providing a financial
safety net.
Lastly, the May survey asked what actions, if any, a producer
would take if changes to the crop insurance subsidy caused
insurance premiums to increase by 50 percent. More than half of
producers said they would change either the insurance product they
purchase or their coverage level and just over a quarter of
respondents said they would not purchase crop insurance next year
if their cost increased by half.
For additional information about producer sentiment regarding
Farm Bill legislation including crop insurance and subsidies, read
the full May Ag Economy Barometer report at
http://purdue.edu/agbarometer.
The Ag Economy Barometer, Index of Current Conditions and Index
of Future Expectations are available on the Bloomberg Terminal
under the following ticker symbols: AGECBARO, AGECCURC and
AGECFTEX.
About the Purdue University
Center for Commercial Agriculture
The Center for Commercial
Agriculture was founded in 2011 to provide professional development
and educational programs for farmers. Housed within Purdue University's Department of Agricultural
Economics, the center's faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today's business environment.
About CME Group
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SOURCE CME Group